CB RICHARD ELLIS
Asia ViewPoint
www.cbre.com/research
March 2011
CHINA’S LOGISTICS: RISING DEMAND BUT
A SHORTAGE OF SUPPLY
by Andrew Hatherley, Executive Director, Industrial & Logistics Services, Asia
Danny Ma, Senior Director, CBRE Research, China
Ada Choi, Director, CBRE Research, Asia
Because of its size and rapid growing economy, China
is of paramount importance to the global logistics
industry. Indeed, for many players, it is currently their
key market for development and growth. However,
the China logistics sector is also relatively immature.
Overseas logistics companies were only permitted to
set up wholly-owned business entities in China in 2005,
four years after China’s accession to membership in
the WTO, but many have now expanded their business
network across mainland China. Demand for logistics
facilities has grown in tandem but the supply of modern
logistics space remains limited. Out of China’s total
stock of 550 million sq m of good quality storage
space, only 5.8 million sq m comprises modern logistics
facilities1. Storage space per capita in China is a mere
0.38 sq m and its ratio to external trades is 0.19 sq m
per US$1,000 trade in 2010. Even allowing for the less
developed nature of the Chinese economy, with most
manufacturing goods targeted for exports, the market
is undersupplied with quality space at a time when
demand is rising.
Good quality warehouse stock
Estimated
warehouse
stock (GFA
million sq m)
Ratio to total
trade volume
(sq m per
US$1,000)
Warehouse
stock
GFA (sq m)
per capita
China
550
0.19
0.41
Hong Kong
31
0.04
4.46
Japan
480
0.33
3.78
United States
1,600
0.38
5.16
Source: China Association of Warehouses and Storage, CB Richard Ellis estimates, CIA The
World Factbook, Hong Kong Rating & Valuation Dept Property Review 2010
1 Modern logistics facilities meet requirements of modern logistics operation for guaranteed
storage safety, optimal/flexible space utilization and high operational efficiency.
Over the next five years it is forecast that China will be the
main driver of the global economy, with its contribution
to global growth projected to increase from 30% in 2010
to 35% in 2015. China’s growing clout as not only a
producer but a consumer is altering the manner in which
MNCs are drawing up business plans for the coming
five years. Against this backdrop, demand for logistics
facilities is expected to grow further. However, one major
factor inhibiting this growth is the difficulty which specialist
industrial developers and owner occupiers are currently
encountering, on a nationwide basis, in sourcing land
sites for the construction of logistics facilities. As a result,
the current supply-demand imbalance is expected to
continue in at least the short-term, creating the conditions
for logistics assets to appreciate and undergo significant
upward rental growth.
The appreciation of logistics rents and the shortage of
land for logistics facilities poses a challenge for both
the real estate sector and society as a whole, as logistics
operators, retailers and manufacturers will factor in
higher storage costs in the pricing of goods. The increase
in storage costs, which accounts for about one-third of
overall logistics costs, or 5.9% of the country’s GDP,
will add further pressure to the already high rate of
inflation in China.
THE SOURCE OF GROWTH IN CHINA
Having served as “the world’s factory” for the past 20
years, China is now re-orienting towards becoming,
from the perspective of its own residents, the “world’s
biggest supermarket.” The country has been stepping
up its efforts to re-direct its model of development to
make it less reliant on exports and driven more by the
consumer spending of a rising middle class.
© 2011, CB Richard Ellis, Inc.
to stabilise, due, in part, to the recent implementation
of several new rounds of real estate market cooling
measures.
Amidst the continued brisk growth, the only sector which
is making a diminishing contribution to China’s GDP
growth is net exports. However, this does not mean that
Share of contribution to China GDP
Household consumption
Gross fixed capital formation
Government consumption
Net export
60%
50%
40%
Apart from stimulating domestic consumption, the huge
economic stimulus package of 2009 which was devoted
to investment in the form of infrastructure construction,
and which has been reflected in the increase in
contribution in gross fixed capital formation in the
past two years, has also been a key driver of domestic
economic growth, accounting for 44% of GDP in 2009.
While China will continue to invest in infrastructure, the
level of contribution in this sector has already begun
30%
20%
10%
0%
Forecast
2015
2010
2005
2000
1995
1990
-10%
Source: China Statistics Yearbook, IMA Asia
Major manufacturing, consumption and distribution hubs
Asia ViewPoint: China’s Logistics: Rising Demand But a Shortage of Supply
In line with this goal, China has been actively pursuing
policies designed to both boost incomes and spur
consumption, ranging from providing two extended
golden week holidays around Chinese New Year and
China National Day, to providing subsidies for residents
of rural areas to purchase computers, home appliances
and automobiles. The prominently announced national
goals of supporting urbanisation, reducing income
inequality, improving social security and healthcare and
also improving infrastructure also broadly supports the
objective of ensuring that more of the national income
filters down and is spent by ordinary people.
Shenyang
Beijing
Tianjin
Jinan
Dalian
Qingdao
Taiyuan
Lianyungang
Xi’an
Nanjing
LEGEND
Leading Airports
Shanghai
Chengdu
Wuhan
Chongqing
Hangzhou
Ningbo
Leading Ports
Main Distribution Centres
Leading Manufacturing
Centres
Kumming
Xiamen
Guangzhou
Foshan
Shenzhen
Inland Consumption Hubs
© 2011, CB Richard Ellis, Inc.
March 2011
Page 2
As a consequence of this expected change, despite the
shift which is taking place in China’s industrial structure,
the country’s key ports are expected to continue to see
growth in freight volume. Five of the top 10 ports in the
world are located along China’s northern and eastern
coast. These ports, comprising Shanghai, Ningbo,
Tianjin, Qingdao and Shenzhen, already accounted for
over 50% of China’s total freight volume in 2009.
MANUFACTURING EXPANSION TO THE
HINTERLAND
While many manufacturing facilities are located in areas
close to these major ports, some manufacturers have
already begun to move their operations into China’s
inland cities. This locational shift is being motivated by a
number of factors, including upward pressure on industrial
wages, Guangdong Province’s stricter enforcement of
national labour laws and selective outbreaks of labour
unrest. One of the prominent examples is iphone
manufacturer Foxconn’s plan to eventually move all of
the mass manufacturing to sites outside Shenzhen. The
company is building huge plants in Henan and Sichuan,
which are the home of most of the migrant workers
now working in the coastal manufacturing bases, to
accommodate 200,000 workers.
Apart from these factors, another reason for the shift
towards the hinterland is manufacturers’ growing interest
in strengthening the development of their domestic sales
network, reducing the need to ship goods through the
key foreign trade ports, and placing more emphasis on
domestic transportation that is targeted specifically at
satisfying local consumption needs.
Along with the growth in their domestic retail sales,
PRC-based retailers are similarly keen on expanding
their national sales network. Local retail chains have
experienced exponential growth over the past decade,
with the total floor area occupied by retail chain
operations in China having risen by 400% in 20032009 alone to 118 million sq m as of the end of 2009.
Surprisingly, the pace of retail expansion was apparently
totally unaffected by onset of the global financial crisis,
with total floor space taken up growing by 16% in 2009.
Many international retailers have now developed their
China operations significantly beyond the earlier stage
when they were scrambling to establish firm footholds in
second tier city markets. Many have already embarked
on the third and fourth rounds of their expansion in
China. Therefore, in order to support this new, inwardfocused growth, cities in Central and West China have
emerged as having much greater significance as both
distribution and manufacturing centres. Cities such as
Chengdu, Chongqing, Xi’an in the West and Wuhan
in Central China have recently witnessed the increased
growth of retailers and logistics companies setting up
operations centres in their drive to more deeply penetrate
the domestic consumer market. For example, in early
2009 e-commerce portal Alibaba announced plans to set
up its national base in Chengdu and other inland cities
to handle R&D, background operations, maintenance,
disaster recovery and training businesses.
The confluence of all of these activities happening across
the nation has collectively fed stronger domestic demand
for logistics services. However, despite these growing
requirements, the development of a modern logistics
industry in China is still facing a number of challenges:
Asia ViewPoint: China’s Logistics: Rising Demand But a Shortage of Supply
China is poised to play a smaller role in global trade, but
rather that the growth in imports is expected to outpace
the growth in exports. China is continuing to play a
growing role in global trade, and it is projected that it
will account for a larger share of global trade than the
United States by 2012.
• The relatively low penetration of China’s logistics sector
by third-party logistics service providers. The amount
spent on 3PL as a proportion of total logistics was
only 2.7% in 2009, far lower than the 30% in Western
Europe and 20.7% in the US.
• In the retail sector, only 9% use 3PL services, compared
with 32% which are self-managed through retailers’
own distribution networks.
• The fragmentation of the logistics market: China’s
top 20 operators only account for 6% of total logistics
expenditure in the country.
• The general lack of a systematic approach to retail
supply chain management, particularly among
small and medium enterprises. According to a study
conducted by Oriental Logistics, about 70% of small
shops do not understand what logistics means to their
business.
• China needs to raise the efficiency of its logistics sector
as a whole, an improvement which is unlike to occur
until the quality of transportation infrastructure in its
vast inland areas begins to close the gap with the more
developed coast.
© 2011, CB Richard Ellis, Inc.
March 2011
Page 3
Sinotrans
China Shipping
Kailuan Group Logistics
China National Materials
Storage and Transportation
Xiamen Xiangyu Group
China Railway Materials
Handan Dingfeng Logistics
CNPC Transportation
Guolong Logistics
China Railway Container
Transport
China Railway Express
SF Express
Air China Cargo
Yuannan Logistics
Sinopec Pipeline Transport
& Storage
SITC Maritime Group
Chongqing Port Logistics
Group
Kerry EAS Logistics
Taitie Logistics
DHL-Sinotrans
FedEx
One solution to the problem is introducing more foreign
technical know-how, including encouraging more China
market penetration by overseas 3PL providers and
assisting certain specialist overseas logistics facilities
investors to expand their businesses in China.
CHINA IS PLAYING A 3PL CATCH UP GAME
0 10203040506070 80
Source: China Federation of Logistics & Purchasing
AND YET, THERE ARE REAL SIGNS OF HOPE ON
THE HORIZON
While there are signs that efficiency in China’s logistics
sector is already improving, costs are still far too high.
China’s logistics expenditure is still disproportionally
large, accounting for 18.1% of GDP in 2009, compared
to less than 10% in the EU and the US. Among the major
Asian economies, China only compares favourably with
highly inefficient Vietnam, where logistics costs account
for 25% of GDP.
The Central Government has already stated that
improving efficiency in the logistics sector is a key element
of its national strategic policy. In its “Logistics Industry
Total logistics cost as percentage of GDP (2009)
30%
25%
20%
Although the penetration rate of 3PL services remains
low in China, this is the fastest growing logistics market
sub-segment in China, and is being driven largely by
the requirements of international companies, domestic
FMCG retailers and online retailers which are more
advanced in developing sophisticated supply chain
management. Indeed, between 2005-2009, China’s
3PL contract logistics market was the fastest growing
logistics market in the world. The total value of contracts
rose at 82% per annum to stand at US$25 billion by
year-end 2009 and markets were forecast to grow at a
whopping 111% per annum in 2009-2013, according to
a forecast prepared by transport analytics firm, Transport
Intelligence.
IMPROVED TRANSPORTATION INFRASTRUCTURE
IN THE INTERIOR WILL LEAD TO BETTER
EFFICIENCY
Another strategy to increase logistics efficiency is
launching investment targeted at improving transportation
infrastructure. Currently, road transportation accounts for
about three quarters of total freight volume in China. To
improve the national road system, China plans to build
a national highway network to cover about 1 billion of
China’s population under the so called “7918 network”,
with 7 highways connecting Beijing to other cities, 9
arterial highways from north to south and another 18
highways connecting the east and west.
However, the reliance on roads for freight cargo is
expected to decrease in the future as China is investing
heavily to improve its railways and inland river port
facilities, both of which are more economical forms of
transportation than roads.
15%
10%
5%
0%
Restructuring and Revitalisation Stimulus Plan” issued in
2009, the Chinese government emphasised its aim to
enhance the modern logistics service industry and lower
total logistics costs as a percentage of GDP.
Asia ViewPoint: China’s Logistics: Rising Demand But a Shortage of Supply
China’s leading transport and logistics enterprises 2009
(revenue, RMB billion)
EU
Source: KPMG
US
Japan
India
China
Vietnam
For railways, the major project is the national high-
© 2011, CB Richard Ellis, Inc.
March 2011
Page 4
The quantum of air cargo used for external trade
shipments is still quite small in China as many airports in
inland cities have not entered into multilateral agreements
to open international air transportation routes. This is
an area the Civil Aviation Administration of China has
to work on in the coming decade. That being said, the
number of civil airports is expected to increase quite
substantially in the years ahead in order to handle the
rapidly increasing passenger volume.
catch up. The key implication of this changed approach
to urban planning is that infrastructure planning will be
considered on a regional level, rather than merely on a
city level, and that this will force local/city governments
to adopt a more coordinated and inclusive approach to
industrial development rather than competing with each
other to attract the operational presence of the same set
of secondary or tertiary industry players.
While narrowing the development gap between coastal
city clusters and their inland counterparts is one of the
key targets for the Beijing government over the coming
decade, economic activity will nevertheless remain highly
concentrated in first tier cities. As illustrated in the graph
plotting the size of retail sales against total trade volume
in 2009, Shanghai, Beijing and Shenzhen have recorded
a much higher volume of trade and retail sales compared
to other cities, a trend which is expected to persist, at least
over the short-term.
However, inland cities have recorded higher growth
over the past three years and this trend is expected to
continue over at least the medium term future. Looking
at individual city clusters, the growth of second-tier cities
is also typically higher than leading cities in the cluster.
Since 2008 China has begun adopting a more scientific
approach towards planning urban development. While
previously the emphasis was on the development of
several mega cities, the new thinking adopts a more
inclusive approach and encourages a more balanced
regional development. Besides the three existing
economic powerhouses, the Bohai Rim, the PRD and
the YRD, an additional six city clusters, which are at an
earlier phase of development, are being encouraged to
SHORTAGE OF MODERN LOGISTICS FACILITIES
Size of retail sales and trade volume
Three year average growth in retail sales and trade volume
Seeing that inland cities have higher growth potential,
major overseas logistics property investors have been
expanding across China. Shanghai and its neighbouring
city of Kunshan currently have the largest concentration
of international logistics property investors. Beijing,
Guangzhou, Shenzhen and Tianjin are also home to a
significant quantum of modern logistics facilities while in
3,000
2,000
Inland cities
Cities in Bohai Rim
Cities in YRD
Cities in PRD
First tier cities
 Beijing
1,500
1,000
500
 Dongguan
 Ningbo
 Tianjin
 Guangzhou
 Qingdao
Hangzhou  
Nanjing
Jinan  Chengdu
 Wuhan
 Chongqing
Xi’an    Shenyang
 Chengdu
35%
0
0 1,0002,0003,0004,0005,0006,000
Retail sales (RMB 100 million)
Total trade (3 yr avg growth)
Total trade (USD 100 million)
2,500
40%
 Shanghai
 Shenzhen
Asia ViewPoint: China’s Logistics: Rising Demand But a Shortage of Supply
speed rail system, a scheme designed as a mammoth,
national-scale network connecting the coastal areas and
China’s inner regions. The system takes “four major
vertical lines and four major horizontal lines” as its
main skeleton and comprises a framework connecting
a total of 9 major conurbations. Upon its completion in
2020 the network will provide a total of 16,000 km of
high-speed railway line. As more high-speed rail lines
are completed and become operational over the next
decade, more existing rail lines will be converted from
passenger/freight use to tracks specifically designated
for transporting cargo. Waterways will be an important
transportation infrastructure for inner cities along the
Yangtze and Yellow Rivers and it is expected that riverine
ports will serve a total of 20 provinces by 2020.
Inland cities
Cities in Bohai Rim
Cities in YRD
Cities in PRD
30%
Inland cities
25%
 Xi’an
20%
 Ningbo
 Beijing
15%
10%
5%
 Shanghai
 Shenzhen
 Dongguan
 Hangzhou
 Wuhan
 Jinan
 Guangzhou
 Chongqing
 Qingdao
 Nanjing
 Tianjin
0%
15%16%17%18%19% 20%21%22%
Retail sales (3 yr avg growth)
Note: 3 year average growth between 2007–2009
Source: Local statistics bureaus
Source: Local statistics bureaus
© 2011, CB Richard Ellis, Inc.
March 2011
Page 5
220
Coastal 2nd tier cities
Inland 2nd tier cities
1st tier cities
200
(Q1 2003 = 100)
180
160
140
120
Q4 10
Q4 09
Q4 08
Q4 07
Q4 06
Q4 05
80
Q4 04
100
Q4 03
While international logistics investors can clearly see
that there is ample room for development in China, the
future supply pipeline is quite thin due to the fact that
investors are faced with difficulty in finding suitable land
development sites zoned for logistics use. The major
reason for this is the lower preference for allocating land
for logistics use by local government authorities.
Industrial land price index
Source: CBRE Research
WHY IS THERE A SHORTAGE OF SITES FOR
LOGISTICS FACILITIES?
The sale of development sites for commercial development
is the main source of revenue for local governments.
However, prices fetched for industrial sites are much lower
than those commanded by residential or commercial
sites. Local governments thus prefer to allocate residential
and commercial zoning rather than industrial zoning
when planning new development areas. Even within
industrial and high-tech parks, campus offices, factories
and R&D facilities are projects that will bring in revenue
and boost employment. Local governments can also
augment their tax revenues from these businesses. On the
other hand, the increase in business flow and employment
which directly results from developing storage facilities
is limited. In many cases, local authorities simply view
logistics as a kind of ancillary service. This, in turn, results
in a lower preference on the part of local government
authorities to allocate sites for logistics operations. It is not
only overseas investors who are confronting this problem,
with large State-owned Enterprises (SOEs) facing similar
difficulties in obtaining sites for housing their own logistics
operations.
Another factor contributing to the shortage of logistics
land is land hoarding by many domestic SMEs, which
have been acquiring industrial sites over the past few
years in anticipation of the continued capital appreciation
of land values and the increasing scarcity of land. This
trend is most notable in the Hangzhou-Ningbo area of
the Yangtze River Delta. SMEs engaged in this practice use
part of sites they acquire to construct facilities for self-use
and lease the rest as warehouses to other companies for
low rents. The policy that requires industrial land to be
transferred only through bidding, auction or listing above
a minimum land price commencing from June 2007 has
also help pushed industrial land prices up over the past
few years. In the past five years, industrial land prices in
China appreciated by about 60-70% across the board.
Higher land costs coupled with strong demand
have combined to support growth in logistics rentals
throughout 2010. Analysed by city, first tier cities have
seen a clear downward trend in logistics rents during late
2008 and the first half of 2009 under the impact of the
global financial crisis but recovered quickly thereafter.
Rentals in Shanghai rebounded 5% in 2010 but are still
about 5% lower than the level before the GFC. Beijing’s
rentals are growing even faster, at a rate of 15.2% in
2010. Brisk absorption also brought a big compression in
vacancy which is now around 8% in major logistics parks.
Availability is even tighter in areas near key port and
airport facilities. We expect that rents will have another
10-15% growth in these cities and vacancy will decline
Logistics rental and vacancy rate - Shanghai vs Beijing
Rental - Shanghai
Rental - Beijing
32
Vacancy - Shanghai
Vacancy - Beijing
Forecast
16%
First tier cities: Beijing, Guangzhou, Shanghai and Shenzhen
18
2%
Coastal Second tier cities: Dalian, Hangzhou, Ningbo, Nanjing, Qingdao, Shenyang
and Tianjin
16
0%
Q4 11
Vacancy rate
4%
Q3 11
20
Q2 11
6%
Q1 11
22
Q4 10
8%
Q3 10
24
Q2 10
10%
Q1 10
26
Q4 09
12%
Q3 09
28
Q3 08
14%
Rental (RMB psm/month)
30
Inland second tier cities: Chengdu, Chongqing, Wuhan and Xi’an
Asia ViewPoint: China’s Logistics: Rising Demand But a Shortage of Supply
other cities, warehousing is predominately in the form of
simple concrete boxes. The total stock of modern logistics
facilities in China is just 5.8 million sq m, a figure which is
disproportionately low for a nation of 1.3 billion people.
© 2011, CB Richard Ellis, Inc.
March 2011
Page 6
Logistics rental index
130
Coastal 2nd tier cities
Inland 2nd tier cities
1st tier cities
125
(Q1 2007 = 100)
120
115
110
105
100
95
90
Q4 10
Q3 10
Q2 10
Q1 10
Q4 09
Q3 09
Q2 09
Q1 09
Q4 08
Q3 08
Q2 08
Q1 08
Q4 07
Q3 07
Q2 07
80
Q1 07
85
Source: CBRE Research
The economic downturn appears to have had only a
limited impact on rentals in inland second tier cities. The
simple reason for this is that demand in these markets is
driven by domestic consumption which remained largely
intact during the economic downturn.
Rental levels in China’s second tier cities are still quite
low compared to leading cities such as Beijing, Shanghai
and Shenzhen, although a number of them are catching
up at a rapid rate. However, as our analysis reveals, the
drivers of demand for logistics facilities and the economics
of operating them are quite different geographically.
Since Beijing is the political centre of China, most of the
country’s SOEs are headquartered there, giving the city’s
an additional SOE dimension beyond simply being the
capital of the PRC. The SOEs which are headquartered in
Beijing are generally quite conservative about outsourcing
logistics operations to 3PLs and are not presently under
pressure to do so. Compared to Beijing, Tianjin is more
inclined to attract overseas players into its local industrial /
logistics sector. In addition, Tianjin is the major port city of
North China and thus naturally generates high demand
for logistics facilities. The rental gap between Beijing
and Tianjin for such facilities is therefore not significant.
However, the rental gap between these “first tier logistics
cities” and “second tier logistics cities in the Bohai Rim”
can be quite substantial.
In the Yangtze River Delta, numerous facilities are
clustered in and around Shanghai. As the logistics zones
near the Yanshan port and Pudong airport have already
been filled for the most part, a large proportion of new
development activity is now focused on Western Shanghai
and adjoining cities such as Suzhou and Kunshan. Down
in Zhejiang, although Ningbo Port also has high container
throughput, companies in this part of this region are
mainly private enterprises / small manufacturers and
thus have smaller requirements on modern warehousing.
In the Pearl River Delta, most of the activity is concentrated
in Shenzhen which has a deep water port and benefits
from its close proximity to Hong Kong. Guangzhou also
has river ports to handle exports of automobiles and
other products, but logistics demand in the provincial
capital is largely driven by domestic consumption.
Among the second tier cities, the steepness of recent
growth in demand in Foshan has been amongst the
most outstanding in the PRD area, and this has grown
more noticeable as Foshan’s bonds with Guangzhou
have grown stronger. Although the average rental
level in Foshan is lower than that in Guangzhou, the
rental differential for prime logistics facilities in key
economic development zones in the cities of Foshan and
Guangzhou is very little.
Western and Central China urban hubs are different from
Coastal cities, where logistics demand is largely driven
by external trade. By contrast, in Western China demand
is driven more by retail consumption. Fast Moving
Consumer Goods (FMCG) companies and online retailers
in particular are growing rapidly and their requirements
for logistics facilities are trending higher. Within Western
China, Chengdu is the preferred location for setting up
a regional distribution hub. Multi-tenant logistics centres
can easily find tenants.
Asia ViewPoint: China’s Logistics: Rising Demand But a Shortage of Supply
further, making it even more challenging for occupiers to
source suitable space to cope with their business growth.
WAYS TO ENHANCE THE ECONOMIC VALUE OF
LOGISTICS LAND
While the Central Government has clearly prioritised the
development of a modern logistics sector, the scarcity
of logistics sites is expected to remain as the key issue
confronting international investors for some time. Some
have already begun to adjust their business development
strategies for China to work around this limitation.
One of the trends is the emergence of multi-storey
warehouse facilities. Currently, the majority of China’s
warehouses are of the single-storey type, but overseas
investors have already started to develop multi-storey
warehouse facilities in supply-constrained areas such as
Waigaoqiao Bonded Zone in Shanghai and Guangdong
© 2011, CB Richard Ellis, Inc.
March 2011
Page 7
While developing logistics sites as multi-storey warehouses
can boost the accommodation value of such sites, the
operational efficiency of these developments’ upper floors
remains a major concern for prospective occupiers. This
is a particularly pressing issue for those which only have
cargo lifts to serve their upper floors. Rents for upper
floors are often only half of those charged for ground
floor space. Multi-storey projects currently in the pipeline
generally provide ramp access to floors. The rental gap
between those floors with ramp access and ground
floors is much lower at around 10%, as the efficiency of
operating from the upper floors is not much different from
that when operating from the ground floor.
Investors have also turned more active in searching
for occupiers for build-to-suit (BTS) projects, which
provide a more certain income flow. It is easier for BTS
projects to secure sites from local governments as these
projects generally are accompanied by substantial FDI
commitments from large corporations in their localities.
For large corporations, BTS solutions ensure the delivery
of the right facility to cope with their business growth.
One major example of this trend has seen Global
Logistics Properties develop four BTS distribution centres
in Shanghai, Guangzhou, Hangzhou and Qingdao for
Yum!, the operator of KFC and Pizza Hut.
CONCLUSION: SHORT TO MEDIUM PROSPECTS
OF THE CHINA LOGISTICS SECTOR
The construction of new highway and railway systems
will radically alter the landscape of many Chinese
cities and stimulate the emergence of new areas as
the preferred location for logistics and manufacturing.
Specialist developers and investors in logistics facilities
will be increasingly focused on urban fringe areas or
even in satellite commercial/industrial cities which lie in
an orbital relationship around major urban areas, but
which are expected to enjoy improved accessibility when
future highway projects come on stream.
Export-oriented companies will continue to account for the
bulk of demand, particularly in coastal cities and areas
near ports. 3PL providers are growing and increasing
their penetration across China’s various geographies.
FMCGs and online shopping operators are expanding as
they improve their supply chain management. Demand
is consequently expected to outstrip supply across the
nation in the coming year. The China logistics sector is
expected to mature rapidly in coming years and witness
the emergence of a broader but increasingly efficient and
competitive landscape.
Asia ViewPoint: China’s Logistics: Rising Demand But a Shortage of Supply
Development Zone in Guangzhou. However, outside
the key industrial parks, single-storey facilities remain
the major configuration and are still the preferred
configuration for tenants with large-scale operations.
FOR MORE INFORMATION PLEASE CONTACT:
Andrew Hatherley
Executive Director
Industrial & Logistics Services - Asia
T: (86) 21 2401 1200
E: [email protected]
Danny Ma
Senior Director
CBRE Research - China
T: (86) 21 2401 1317
E: [email protected]
Ada Choi
Director
CBRE Research - Asia
T: (852) 2820 2871
E: [email protected]
© 2011, CB Richard Ellis, Inc.
March 2011
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